EU finance ministers draw blank on new tax law

Speaking to press after the event, EU taxation commissioner Algirdas Semeta described their intransigence as a "great disappointment."

He called on the EU to "get its house in order" on tax evasion and urged EU leaders to "rectify the situation" at a summit next week.

"We need full endorsement of the widest possible application of automatic exchange of information [on tax evaders] within the EU," he said.

For his part, Sven Giegold, a spokesman for the European Parliament's Green group, accused Austria and Luxemborg of "shameless obstructionism."

The tax deal concerns an overhaul of an eight-year-old EU law in order to close loopholes on data about income from trusts, foundations and pension funds.

It also concerns ending Austria and Luxembourg's - two financial centres - exemption from automatic exchange of data on tax cheats.

Luxembourg finance minister Luc Frieden and Austria's Maria Fektor said in a joint press conference on Tuesday that they cannot go ahead until legal uncertainties in the new draft law are clarified and until the UK cracks down on tax fraud in its overseas protectorates, such as the British Virgin Islands.

They also noted that they have given the go-ahead for the European Commission to start negotiations on ending bank secrecy in Andorra, Liechtenstein, Monaco, San Marino and Switzerland.

If the group of five agree to hand over data, Austria and Luxembourg's exemption from EU tax transparency will lapse.

The tax debate is now set to take centre stage at the summit on 22 May.

In a sign of increasing pressure on tax evasion as crisis-hit governments scramble to increase their revenues, 17 EU countries have signed a statement demanding the creation of a new global standard for automatic exchange of information.

The standard is to be based on the Foreign Account Tax Compliance Act (FATCA) passed by the US Congress in 2010.

The group - which includes France, Germany and the UK - called for a multilateral agreement to create "a truly global system of automatic information exchange which would mark a step change in our ability to tackle tax evasion."

In a 2012 study on behalf of the commission, Tax Research UK, a London-based think tank, estimated that EU governments lose up to €1 trillion each year to tax fraud.